Gold prices drop as investors take profits

Gold prices fell on Monday morning as investors took profits after the precious metal hit a recent record high. Traders are now paying attention to the key US inflation report due out this week.

At 2:04 a.m. GMT, spot gold fell 0.4%, to $2,925.63/ounce. Gold had previously hit a record high of $2,954.69 an ounce last Thursday. US gold futures also fell 0.5% to $2,939.30 an ounce.

"Gold prices cannot increase even though the market is tending to avoid risks, because investors take advantage of many profits, reducing the need to buy gold for safe haven" - Tim Waterer, a key market analyst at KCM Trade commented.

This expert believes that with prolonged trade uncertainty, gold may continue to move towards a new record high this week.

Last week, US President Donald Trump announced that he would soon announce new tariffs, possibly within a month or sooner. He added wood and forest products to the list of taxable items, in addition to previous items such as cars, semiconductor chips and imported pharmaceuticals.

The US has previously imposed a 25% tariff on steel and aluminum, and an additional 10% on imports from China.

Investors are closely monitoring the interest rate orientation of the US Federal Reserve (FED), as Mr. Donald Trump's policies are expected to put inflationary pressure. If rising inflation causes the Fed to maintain high interest rates, the appeal of gold - a non-interest-bearing asset - may decline.

The market will focus on the personal consumption expenditure (PCE) index - the FED's preferred inflation measure, expected to be released on Friday this week, to have more signals about the central bank's interest rate policy.

In other metals, spot silver fell 0.4% to $22.42/ounce; platinum fell 0.2% to $967.71/ounce; palladium fell 0.3% to $965.97/ounce.